The normally chatty Huawei Symantec Twitter feed put a sock in it sometime in November. That's just two days after the Chinese telecom company bought out their American partner's stake in the four-year-old joint venture, for $530 million.
We should have known then.
A new report in yesterday's New York Times shows that there was more behind this exit strategy than simple R.O.I.
Symantec -- the popular American security firm -- "feared the alliance with the Chinese company would prevent it from obtaining United States government classified information about cyberthreats," Nicole Perlroth and John Markoff report.
So it decided to cut the company loose.
Those concerns are not unfounded.
Perlroth and Markoff:
National security concerns have long dogged Huawei. Ren Zhengfei, Huawei’s founder and chief executive, is a former officer in China’s People’s Liberation Army, and American government officials and regulators have repeatedly raised concerns about Huawei’s close ties to the Chinese government.
Nor are they unprecedented. The same issue first surfaced in early 2008, when Huawei abandoned its bid to acquire U.S. military preferred provider 3Com. (The Huawei Symantec deal came later.) And again with Sprint Nextel in 2010.
In some ways, it's interesting that this didn't pose a problem sooner.
The lesson here is simple: you're only as good as your partners. In an increasingly globalized economy, multinational firms enter into many partnerships to address as many markets as they can -- but when national interests are at odds, this can create steep hurdles.
From the beginning, Huawei had the upper hand in the joint venture -- not only with the controlling stake, but also in terms of potential benefit. As Byte & Switch put it in 2007:
It looks like Huawei's main goal is to use Symantec's security software for a fresh assault on telecom markets and enterprise customers.
Particularly in the U.S., where it failed with the 3Com deal. Symantec's win, of course: an open door and helping hand to the Asia-Pacific market, with some access to Huawei intellectual property along the way.
Indeed, the original joint venture was seen as a risk -- but more with regard to Symantec's reputation getting tied up in poorly-performing hardware. But "no enterprise in their right mind would buy something like that, " a little birdie told me -- "something" being security appliances.
Moving forward, there remain many questions.
For Huawei: is it willing to clean up its act for unfettered access to the U.S. market, or will it continue to get stopped at every major deal? And what will it do without Symantec's storage software?
For Symantec: will it still seek inroads in China? And is the great hardware experiment over?